Installation partition

Why are you install a 32 bit OS with 8gb of ram?
To use all 8gb you will need to install a 64 bit OS.

Why are you trying to run the Install DVD? You need to boot the Win7 installer to use Drive Options to Delete, repartition and Format before install. Clean Install Windows 7

If the install fails when booting the installer, then wipe the HD with Diskpart Clean Command from Command Line in System Recovery Options. This is much faster and is all that is needed to overcome boot sector corruption which might block install.

I think before setting up an operating system including Windows 7 one must check the hard disk for partitions and organize them properly with a good Partition Manager. If that is done then the set up proceeds relatively smoothly.

In my opinion you need to reorganize your partitions and start the Windows 7 installation de-novo to get a good stable system in the end.

It's easiest to use the Win7 installer to delete and create partitions as you wish, format before installing to first partition: Clean Install Windows 7

You can also leave the partitioning the same to preserve a Recovery or Data partition, just select C to install. The installer will auto-format the partition if you don't.

Easiest of all is to delete all partitions during install, then just click Next to let the installer create and format your install partition (and a small boot partition) for you.

Sometimes there is important data stored in the other partitions that one may not like to get rid of. I am not sure if the Windows 7 installer can re-size a partition without deleting it. That is why I had suggested the use of a good Partition Manager.

If you are starting with a completely clean slate then it does not matter if you use the Windows Partition Manager or a third party one.